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6 Tips for Investing in Tough Times

The current state of the economy has resulted in many challenges for Americans. Foreclosures are at record highs, unemployment is very high and we are in the worst recession since The Great Depression. Times are tough, but we must adapt. Savvy investors see this time as an opportunity to make some of the best investments of their lives. In 30 years, we will talk about how we could buy properties for almost nothing during this recession and we wish we bought 300 more doors. This time is not without risk, below are 6 tips for investing in tough times.

  1. Find the best deals – with so many available deals, savvy investors should get a ton of prospects into their pipeline, weed out the duds and cherry pick only the best ones. Stick to your criteria and walk away if the deal is not good enough because there are 10 more like it and many will be good enough.
  2. Generate private money and financing solutions – Financing is a challenge and cash is king. Generate private money and have financing solutions in place.
  3. Show a successful track record in good times and bad – Investors that defy the odds and have success in good times and bad are in a great position to have continued success.
  4. Mitigate risk by having multiple exits – One exit strategy is not enough. Always have backup plans, be ready for worst case scenarios and mitigate risk with multiple exit strategies. Tremendous equity and tremendous cash flow is a must.
  5. Do not take unneeded risks – Never ever do a deal that is not a smoking deal during tough times. Do not ask questions, just do not do it!
  6. Do your due diligence – Always be thorough in your due diligence. You can avoid many unpleasant surprises when buying. When selling, always qualify buyers with your lender so you do not waste months in escrow and have the buyer’s financing fall through.
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9 Responses to 6 Tips for Investing in Tough Times

  1. Aaron Weiner says:

    Good, sound advice. The unwritten theme to your points: discipline in a down market!

  2. When buying a multi tenant building, make your offer based on what income and expenses are now and not what they might be. Seller’s and their agents have a tendancy to state that you can lease this up and make a killing. My answer is, ” If that is your price, then you get the tenant and do the TI’s.”

    The multiple exit strategy is my biggest problem. They seem to be somewhat limited at this time.

  3. Steve Harvey says:

    good suggestions, but I’m having a difficult time finding private money, any suggestions, i always run accross great apartment deals but afraid to move on them for lack of cash
    Steve

  4. Ryan Moeller says:

    Thanks Aaron, best of luck. Today’s market has a abundance of opportunity!

  5. Ryan Moeller says:

    You are absolutely 100% correct. Always buy based on current operations, not proforma or best case scenario operations. If the seller wants proforma price, they should improve operations to proforma plan and simple. Unfortunately there are suckers that will buy based on what is possible and they will likely make a very poor decision.

  6. Ryan Moeller says:

    Steve,

    I wrote some articles on generating private money you can find here on my blog. Additionally, you can download some free guides on how to raise private money from the link on the right. I hope they help.

  7. Freddie Estine Investmen I Agree the numbers should reflect the property offer with a credit to the buyer for upgrades and cash out for the needed improvements to Steve Harvey it is some times better to lease the property to gain control of it on a master lease option then you have a negociating tool for funding on refi after you get the sellers to finance try it you may find your dream property a cash cow.

    Good Luck Investing
    Freddie

  8. Cheryl Peck says:

    That is great advice in any market!

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